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Top Government Schemes for Startups and MSMEs in India (2026)

Top Government Schemes for Startups and MSMEs in India (2026)

Did you know that India’s MSME (Micro, Small, and Medium Enterprises) sector is a significant contributor to its rapid socio-economic development? There are approximately 6.3 crore MSMEs today, generating turnovers of over Rs. 300 crores. The start-up industry isn’t lagging either. Some 3,000 start-ups are emerging per year and are predicted to create over 2.5 lakh jobs in the coming years.

India’s entrepreneurial spirit is undying. However, there’s one roadblock that poses quite the problem: capital shortage. To tackle this head-on, our government has launched numerous projects for funding small-to-medium businesses.

So, if you are a business owner looking for funding options, here are the top government schemes for MSME and start-ups you can consider.

Latest Government Grant Schemes in 2026

In 2026, the government continues to strengthen support for entrepreneurs with a range of government schemes for business that go beyond traditional credit. Among the key initiatives, the SAMRIDH Scheme offers grants of up to ₹40 lakh to product-focused startups ready to scale, blending funding with mentorship and market access to accelerate growth.

 The Atal Innovation Mission (AIM) remains a major government scheme for startup support. This provides substantial grants to incubators and early-stage innovators in deep tech, AI, and emerging sectors, helping bridge prototype to market. 

For tech innovators, TIDE 2.0 under the Ministry of Electronics & IT gives focused grant support across robotics, IoT and electronics. Its specialised programmes like the MSME Innovative Scheme fund prototypes and commercialisation with significant seed capital. 

Even schemes tied with credit support now integrate grant elements that reduce financial burden and fuel innovation. Alongside these, traditional access to a startup loan by government through schemes such as CGTMSE and Mudra continues, ensuring a balanced mix of grants and credit options for businesses nationwide.

Pradhan Mantri Mudra Yojana

The Pradhan Mantri Mudra Yojana or MUDRA scheme is a unique credit scheme that offers low-interest business loans to MSMEs and start-ups in the non-corporate and non-farming sectors.

Under this government schemes for start-ups and MSMEs, you can avail of three types of loan products:

  • Shishu category – A loan of up to Rs. 50,000 is available for start-ups and small businesses in their initial stages under this category.
  • Kishor category – Mid-aged businesses looking to expand operations can avail up to Rs. 5,00,000 under this category.
  • Tarun category – Under this category, experienced businesses can avail up to Rs. 10,00,000.

Raw Material Assistance Scheme for Startups and MSMEs

Headed by the NSIC (National Small Industries Corporation), the Raw Material Assistance programme is a fruitful government scheme for start-ups and MSMEs. It offers financial help through lender guarantees, credit facilitation, and bill discounts. The government takes care of all the paperwork. In turn, businesses get the necessary funds for bulk purchases of raw material and focus solely on manufacturing.

Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

The Credit Guarantee Trust Fund for Micro and Small Enterprises (CGT SME) is one of India’s largest start-up funding schemes provided by the Ministry of MSME. Under this scheme, eligible MSMEs and start-ups can obtain a collateral-free loan of up to Rs. 1 crore through the Ministry of MSME and Small Industries Development Bank of India (SIDBI). To know more about this CGT SME business loan eligibility, terms and conditions, etc.

Credit Linked Capital Subsidy Scheme (CLCSS)

The Credit Linked Capital Subsidy Scheme (CLCSS) for Technology Upgradation is a government loan scheme for tech start-ups. Here, the Indian Government offers capital to help MSMEs and start-ups upgrade their tech equipment and provides a 15% subsidy for investments of up to Rs. 1 crore. For this, MSMEs/start-ups must get a term loan from a lender through the CLCSS scheme.

Udyam Registration and MSME Certification

MSMEs are the backbone of any economy, adding not only to the country’s GDP but generating employment in towns, suburbs, and villages. However, registering as an MSME was not always easy for many new business owners. They had to visit local bodies and pay the registration fee before they could be considered a legit MSME. 

So, many business owners missed out on the benefits of government schemes meant for MSMEs due to the tiresome and confusing registration process. Udyam Registration Certificate is one of the best government schemes for MSMEs in that regard.

Udyam fast-tracks registration of MSMEs through the online process. New owners just have to visit the Udyam registration portal, provide their Aadhar card, and they get a permanent MSME registration without paying any fee. The Udyam Certificate also makes it easier for owners to avail of government schemes for MSMEs, like subsidised loans. 

Startup India Initiative

The Start-up India scheme is a trademark scheme of the Indian Government. Its purpose is to provide a healthy ecosystem for business and promote entrepreneurship among the citizens of the country. 

This government scheme for start-ups provides the following benefits to eligible businesses:

  • Online self-certification compliance for the country’s labour and environmental laws.
  • Under the Start-up India scheme, the Government will not conduct any inspection for 5 years to check compliance with labour laws. However, an assessment may occur if a credible complaint for any violation is approved by at least one level senior to the inspecting officer. In the case of environmental laws, the Government performs random checks.
  • Fast-track application for start-up patents
  • Tax exemption under Section 80 IAC and Section 56 of the Income Tax Act.
  • Easy process for winding up the company in case of bankruptcy.

MeitY SAMRIDH Scheme for Startup Acceleration

The MeitY SAMRIDH scheme is one of the most important government schemes for start-ups in the country. Many start-ups fail to survive in this competitive business environment due to a lack of funding, low-quality product, and insufficient skill set. So, this scheme helps start-ups with product innovation, business development, and growth. 

Currently, the MeitY SAMRIDH scheme aims to help at least 300 start-ups bring together the necessary skill set and provide them with investor and customer connections. The scheme also aims to facilitate the expansion of these start-ups overseas. 

Key Eligibility and Documents for Startup and MSME Funding

To access funding under a government scheme for startup or other government schemes for business, meeting the right eligibility criteria and submitting proper documentation is crucial. Whether you’re exploring a startup loan by government or benefits under schemes like PMMY, CGTMSE, or Startup India, a clear understanding of requirements helps streamline your application process and boosts approval chances. T

Here’s what you typically need to qualify and apply:

1. Business & Legal Documents

  • Company or firm registration certificate (incl. Udyam/MSME or DPIIT recognition for startups)
  • PAN card and Aadhaar of promoters
  • GST registration (if applicable)

2. Financial & Project Paperwork

  • Bank statements 
  • Detailed of business plan
  • Income tax returns or financial projections

3. Scheme-Specific Essentials

  • Proof of eligibility (age, ownership, sector as required)
  • Collateral/security documents if mandated under specific schemes 

Submitting these accurately can significantly improve your chances of securing government-backed funding.

Comparison Table: Best Government Schemes for Startups/MSMEs in India

If you are exploring a government scheme for startup funding or evaluating suitable government schemes for business, the table below compares some of the most relevant options available for Indian startups and MSMEs. 

From a startup loan by government initiatives to subsidy-led and registration-based benefits, these schemes cater to businesses at different growth stages.

Government SchemeBeneficiariesKey Benefit
Pradhan Mantri Mudra YojanaStartups and MSMEsLow-interest business loans
Raw Material AssistanceStartups and MSMEsCredit support or bulk raw material purchase
CGT SMEStartups and MSMEsCollateral- free loans via SIDBI
CLCSS SchemeTech-based MSMEs15% subsidy on investments of up to Rs 1 crore
Udyam RegistrationMSMEsEasy MSME registration and scheme access
Start-up India SchemeEligible startupsTax benefits and compliance ease
MeitY SAMRIDH SchemeStartupsFunding, mentoring and market access

Benefits of Registering Under Government Business Schemes

Registering under government schemes for businesses can give startups and MSMEs a significant boost. 

The key benefits include:

  • Easy Access to Funds: Avail a startup loan by government with favourable terms.
  • Regulatory Support: Simplified compliance processes for smoother business operations.
  • Networking & Mentorship: Opportunities to connect with industry experts and incubators.
  • Financial Incentives: Tax breaks and subsidies under various government schemes for business.
  • Credibility Boost: Being registered under a government scheme for startup enhances trust among investors and clients.

Common Mistakes to Avoid When Applying for Startup Schemes

When applying for government schemes for business, many startups make avoidable mistakes that can delay approval or affect eligibility. Being mindful of these pitfalls ensures a smoother application process and increases the chances of securing a startup loan by government. Common mistakes to watch out for include:

  • Submitting incomplete or incorrect documents.
  • Overlooking eligibility criteria before applying.
  • Ignoring deadlines and application timelines.
  • Providing vague or unrealistic business plans.
  • Failing to maintain proper financial records or projections.

Avoiding these errors can help startups navigate government schemes efficiently and access the funding they need.

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FAQs

What are the latest government schemes for startups and MSMEs in India in 2026?

 

In 2026, India offers several government schemes for business supporting startups and MSMEs, including SAMRIDH, Atal Innovation Mission, TIDE 2.0, MSME Innovative Scheme, and traditional startup loan by government programs like CGTMSE.

How can a new business apply for a government loan or grant in India?

 

A new business can apply for a government loan or grant in India by researching eligible schemes, preparing a detailed business plan, completing the application online or offline, and submitting the required documents.

Is collateral mandatory for startup or MSME government loans?

 

No, collateral is not always mandatory for startup or MSME government loans. Many schemes offer collateral-free funding, especially for small businesses, though some larger loans may require security depending on the lender and scheme.

Which sectors or industries are eligible for startup funding schemes?

 

Most startup funding schemes target a wide range of sectors, including technology, manufacturing, healthcare, agriculture, and services. Eligibility often depends on the startup’s innovation, scalability, and business model.

What documents are needed to apply for MSME or startup schemes online?

 

To apply for MSME or startup schemes online, you typically need proof of identity, address, business registration documents, GST or PAN details, and a clear business plan.

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